White House Kicks Off Plans for Cyber IDs; Experts Question the Future of Online Anonymity

The U.S. government wants to protect you online. It wants to prevent online identity fraud. And it expects e-commerce sites to listen up to their demands.

That’s why the White House just announced it is putting the Commerce Department in charge of working with online retailers and banks to protect your online privacy. In a prepared statement, President Obama said the Internet “has transformed how we communicate and do business, opening up markets, and connecting our society as never before. But it has also led to new challenges, like online fraud and identity theft, that harm consumers and cost billions of dollars each year.”

By making online transactions safer, the President hopes it will prevent costly crime while fostering growth and innovation.

In fact, U.S. Commerce Secretary Gary Locke recently told the U.S. Chamber of Commerce that “working together, innovators, industry, consumer advocates, and the government can develop standards so that the marketplace can provide more secure online credentials, while protecting privacy, for consumers who want them.”

The goal is to create an “identity ecosystem” that lets consumers use this credential to prove their identity when they’re carrying out sensitive transactions, like banking, but stay anonymous when they are not. (Click here for a cheat sheet if you’re not up for reading all 45 pages of the government’s proposed plans for making online transactions more trustworthy.)

Critics Weigh In

But critics question how much identity will be needed in order to simply use the Internet at all.

Lee Tien, a senior staff attorney with the Electronic Frontier Foundation, thinks the proposed system is not clear and could cut down on user privacy as opposed to enhancing it.

“To some extent, when you make it easier for people to provide ID, you make it easier for people to ask for it,” he told Computerworld.“In a trusted identity ecosystem, we would be required to have an identity for more and more of what we do on the Web, or we won’t be allowed to do certain things.”

The Electronic Privacy Information Center’s Executive Director Marc Rotenberg called the move “historic” but said protecting Americans’ online identity is a “complex problem and the risk of ‘cyber-identity theft’ with consolidated identity systems is very real. The U.S. will need to do more to protect online privacy.”

Others question whether the Commerce Department can guard users’ privacy and security above the government’s own interests. For example, should a group whose purpose is to oversee how Americans buy, sell, and trade goods the best choice to assign these Internet IDs?

This announcement from the White House came shortly after Senators John Kerry and John McCain introduced legislation that would establish a consumer privacy bill of rights. Called the Commercial Privacy Bill of Rights Act of 2011, it would apply to any website that collects and uses data on more than 5,000 individuals each year. The Senators want this bill to help Americans understand they can “opt out” of having their data collected, and also educate the public about data collection practices overall.